The upward march of post-CARD Act credit card APRs is catching more headlines, but in a sense is nothing new. With other revenue sources constrained, and less ability to change rates quickly (i.e. without disclosure), issuers have been steadily moving rates higher.
APRs have climbed more than 20% over the past two years and hit an all-time high of an average 14.78% in mid-November, based on weekly data CreditCards.com collects from 100 of the nation’s top credit card issuers.
And there’s no end in sight. While interest rate caps have been proposed — including a proposal earlier this month from New York Congressman Maurice Hinchey that would limit rates at 15% — none have been passed into law so far.
As a point of comparison, The Federal Reserve’s average credit card rate -calculated on a broader base of banks- reached 13.44% in November (13.67% among accounts assessed interest). Observers are now wondering where APRs will go when their underlying index rates begin to move up from their historic lows.